The risk from external fraud has gathered pace over the past twelve months with seven in ten businesses affected, according to the consultant PwC.
In fact, over the past two years fraud perpetrated from hackers and organised crime rings rose substantially. External perpetrators caused the most disruptive or serious frauds in 43% of cases. In addition, those collaborating from inside organisations committed fraud in 26% of cases.
“External fraudsters are immune to tradition fraud prevention tools such as codes of conduct, training and investigations,” PWC’s economic crime and fraud survey 2022 said.
Multiple offenders
Hackers (31 per cent), customers (29 per cent) and organised criminals (28%) perpetrated most crimes in 2022.
Risk managers need to adapt to stave off such attacks. For example, they will need to strengthen controls over private data to prevent criminals exploiting stolen customer details. In addition, they must reassess knowledge-based authentication systems because such data can sometimes be available to criminals following data breaches.
“Bad actors are also collaborating, which increases both the volume and sophistication of attacks,” the report said. “Thanks to chat rooms, the dark web and cryptocurrency, specialists in data breach, false ID creation, attack methodology and other nuanced areas can connect.”
Patchy response
In a separate survey, most businesses admitted their controls against fraud were patchy. The consultant KPMG found in the US, for instance, 40 per cent of businesses said their anti-fraud controls followed models of international best practice. But about 20 per cent either had no controls or very basic ones. In Latin America, the situation was worse, said A triple threat across the Americas, 2022 KPMG fraud outlook.
About seven in ten businesses (71 per cent) said they experienced internal or external fraud.
Fraud opportunities within a business are the product of its operations. For example, survey respondent at Grupo Bimbo’s José Calderón said the need to obtain raw materials and spare parts creates substantial risks.
“Companies are more likely to circumvent existing controls (such as due diligence on third parties) to get access to those materials as quickly as possible,” he said. This was a particular risk for many businesses both at the low point of the pandemic and amid today’s difficult supply-chain situation.
